Apple's iPad expected to help hold 2013 PC growth to 2%

A new forecast calls for worldwide PC sales to grow just 2 percent this year, held back by demand for Apple's iPad and a tepid response to Windows 8.

Shaw Wu with Sterne Agee issued a note to investors on Monday provided to AppleInsider in which he said he foresees slower-than-expected growth. While most market research firms believe the PC market could grow as much as 9 percent in 2013, he thinks it will be much lower, thanks to a number of factors.

Among those reasons is the competitive threat of Apple's iPad, which now has a starting price of $329 with the entry-level iPad mini. Wu said Windows 8 hardware priced between $500 and $1,200 is "uncompetitive" compared to lower-priced options from Apple and even Google's Android.

Expected struggles in the PC market will also be driven by Apple's Mac lineup, Wu believes. He said Apple's "highly differentiated" computers will continue to eat away at PC marketshare, while Microsoft's Windows platform will also be hurt by low-cost device makers based in the Asia-Pacific region.

In fact, Wu believes Microsoft could see growth from its previous-generation Windows 7 operating system in 2013. He believes the more familiar look and feel of Windows 7 could appeal to some users and businesses who will be upgrading from Windows XP, which Microsoft plans to end support for this year.

As for Windows 8, Microsoft's latest PC operating system, Wu doesn't believe that adoption will be as fast as many other prognosticators have expected.

While consumers may be confused by Windows 8, as some others have projected, Wu said that even Microsoft's PC-making partners are unsure what to build that will appeal to consumers.

"The feedback we have gotten from supply chain sources is that there is great confusion, as there are too many form factors (PC notebooks, tablets, ultrabooks, and convertibles) and most do not know what to build and will actually sell," he said.

Going forward, Wu expects the PC to "become more of a niche." In that respect, he's in agreement with Apple co-founder Steve Jobs, who viewed the iPad as part of a transition to the post-PC era.

Wu sees PC refresh cycles lengthening to between 5 and 7 years, much longer than the 2-to-3-year cycles that have historically existed in the PC market. Taking their place will be mobile devices, which he expects will be upgraded ever 1 to 3 years.

"We see smartphones and tablets becoming the 'daily driver' while PCs are more like trucks for specialized tasks," he said.

Among those reasons is the competitive threat of Apple's iPad, which now has a starting price of $329 with the entry-level iPad mini. Wu said Windows 8 hardware priced between $500 and $1,200 is "uncompetitive" compared to lower-priced options from Apple and even Google's Android.

Among those reasons is the competitive threat of Apple's iPad, which now has a starting price of $329 with the entry-level iPad mini. Wu said Windows 8 hardware priced between $500 and $1,200 is "uncompetitive" compared to lower-priced options from Apple and even Google's Android.

And, yet, sales of Apple's computers (which sell for more than $500 to 1200) have been growing faster than the industry as a whole (or, in the most recent period, dropping less than the industry as a whole). Even their iPad which sells for more than most of the competition is doing extremely well.

When will these analysts figure out that it's not all about price? It's about value. People will pay a higher price if they feel that they're getting something for the extra money. THAT is why PC sales are suffering - not enough benefit to justify the investment.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

And, yet, sales of Apple's products (which sell for more than $500 to 1200) have been growing faster than the industry as a whole (or, in the most recent period, dropping less than the industry as a whole).
When will these analysts figure out that it's not all about price? It's about value. People will pay a higher price if they feel that they're getting something for the extra money. THAT is why PC sales are suffering - not enough benefit to justify the investment.

Actually, I think you'll find that it's because people don't have a tablet.

I'm more likely to buy what I don't have, and if I buy a tablet, I'm either going to buy a cheap one (Kindle Fire) or the best (iPad).

Most homes have a PC and don't need a new one. Eventually the market will stabilize and sales of both PCs and tablets will enter the organic replacement/growth phase when homes all have tablets too. In the meantime we have millions of tablet sales, along with the not insignificant 350M PC sales.

I have to say I'm actually surprised that tablets have not reduced PC sales... which pretty much shows that tablets are not replacing many PC sales.

Actually, I think you'll find that it's because people don't have a tablet.

I'm more likely to buy what I don't have, and if I buy a tablet, I'm either going to buy a cheap one (Kindle Fire) or the best (iPad).

Most homes have a PC and don't need a new one. Eventually the market will stabilize and sales of both PCs and tablets will enter the organic replacement/growth phase when homes all have tablets too. In the meantime we have millions of tablet sales, along with the not insignificant 350M PC sales.

I have to say I'm actually surprised that tablets have not reduced PC sales... which pretty much shows that tablets are not replacing many PC sales.

I humbly disagree on your basic premise. Most folks I know with a PC had to replace it every few years as the cost of having a nerd fix it (software / virus / Norton screwed up etc. etc. etc.) was higher than he'd offer to 'build' them a new one and so guess what? Yes, another PC sale! Now they all say "screw this" put the PC on the curb on trash day and get an iPad. In other words the iPad is replacing many PCs not joining them. An iPad may last them what would have been several PC cycles (as explained above) so this PC down trend will accelerate from here on in ...Edited by digitalclips - 1/7/13 at 8:21am

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

I humbly disagree on your basic premise. Most folks I know with a PC had to replace it every few years as the cost of having a nerd fix it (software / virus / Norton screwed up etc. etc. etc.) was higher than he'd offer to 'build' them a new one and so guess what? Yes, another PC sale! Now they all say "screw this" put the PC on the curb on trash day and get an iPad. In other words the iPad is replacing many PCs not joining them. An iPad may last them what would have been several PC cycles (as explained above) so this PC down trend will accelerate from here on in ...

I really don't buy that. I don't think all that many people have dumped their PC to use an iPad.

I suspect that the reason for the decline in PC sales is that even an older, entry level PC is more than sufficient for what most people are doing. How much computer power do you need to access Facebook and send email? A decade or two ago, having a faster computer was a big deal - so many people (and businesses) upgraded regularly. Today, it doesn't really offer much advantage.

In my case, for example, I used to upgrade my computers every 2 years or so (sometimes stretching to 3 years for Macs). Today, that's no longer necessary. I just finally replaced my 2006 MBP - and even that was necessary only because the keyboard was falling apart and I didn't feel that the cost of the keyboard was justified on that old a computer (still, I'll probably get a few hundred dollars on eBay). A lot of people I know are in the same boat.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

I really don't buy that. I don't think all that many people have dumped their PC to use an iPad.
I suspect that the reason for the decline in PC sales is that even an older, entry level PC is more than sufficient for what most people are doing. How much computer power do you need to access Facebook and send email? A decade or two ago, having a faster computer was a big deal - so many people (and businesses) upgraded regularly. Today, it doesn't really offer much advantage.
In my case, for example, I used to upgrade my computers every 2 years or so (sometimes stretching to 3 years for Macs). Today, that's no longer necessary. I just finally replaced my 2006 MBP - and even that was necessary only because the keyboard was falling apart and I didn't feel that the cost of the keyboard was justified on that old a computer (still, I'll probably get a few hundred dollars on eBay). A lot of people I know are in the same boat.

I can only talk about what i see around here (a gated community) where I do support for Apple products on the side for friends and neighbors (mostly for free or beer). I have set up countless iPads for folks who are leaving the PC in a corner collecting dust or trashing once they were up and running on an iPad. Most come back and ask for help with Airprint printers shortly after that then an iPhone then ATV and quite a lot now want Macs... It is remarkable how the iPad (or iPhone) once in their hands starts an Apple eco system desire rolling.

BTW you are a knowledgable user so you can keep a PC running, the folks I am talking about are helpless, not knowing a browser from a mail application and rely on paying nerds high prices for help. I'd wager that sort out number your sort

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

i doubt very much worldwide desktop/laptop PC sales will grow at all in 2013. Windows has peaked and has nowhere to go but down from here.

in the first world the drop will be sharp this year - 10-20%, and even more in 2014. consumers will completely switch to hand held tablets etc. unless they need a desktop/laptop for very specific reasons. so there goes 2/3 of that market segment within 5 years. and as noted in the report, businesses are going to take much longer - twice as long - before replacing their hardware too. that will eventually cut businesses sales by at least 1/3. combined, there will be at least 50% drop by 2017, probably sooner.

and MS' W8 fiasco is accelerating this changeover. both consumers and business are avoiding it. MS can salvage this with an update (by making the Metro UI an option), but the damage will be done and the big switch will be underway.

Apple on the other hand will cruise along in its premium market niche, with modest growth in sales that equals significant growth in market share. it will be interesting to hear the upcoming 2012 sales reports.

I really don't buy that. I don't think all that many people have dumped their PC to use an iPad.

I think you'd be mistaken. It's purely anecdotal but I know many people who have pretty much given up on their Macs at this point. They simply don't use them much anymore. They are using their iPad a lot more than they ever used their Mac. Some might buy another Mac in the future but because of the iPad that timetable for a new "PC" has been pushed back until that seldom-used Mac is truly no longer usable for whatever occasional task they might have.

This bot has been removed from circulation due to a malfunctioning morality chip.

While consumers may be confused by Windows 8, as some others have projected, Wu said that even Microsoft's PC-making partners are unsure what to build that will appeal to consumers.
"The feedback we have gotten from supply chain sources is that there is great confusion, as there are too many form factors (PC notebooks, tablets, ultrabooks, and convertibles) and most do not know what to build and will actually sell," he said.

I find this amazing. It's almost as if the OS software and hardware were made by completely different companies with conflicting goals . Unlike say, one company that's vertically integrated the OS to support the hardware under a common vision. Well. I remember when the tech pundits were telling Apple to license their OS to clone makers and dump their hardware business...as if Microsoft had figured out the formula for success.

I think you'd be mistaken. It's purely anecdotal but I know many people who have pretty much given up on their Macs at this point. They simply don't use them much anymore. They are using their iPad a lot more than they ever used their Mac. Some might buy another Mac in the future but because of the iPad that timetable for a new "PC" has been pushed back until that seldom-used Mac is truly no longer usable for whatever occasional task they might have.

"My anecdotes can beat up your anecdotes any day of the week."

I don't personally know anyone who gave up their PC or Mac for an iPad, and if you'll recall, Steve Jobs positioned the iPad as an in-between device slotted between the smartphone and laptop in his January 2010 keynote introducing the iPad. However, as the iPad became more useful due to a slew of easy to use and buy apps, I'm sure people have found less of a reason to turn on their PCs when all they need to do is check Facebook, email, or play Angry Birds. If that's why they had a PC to begin with, then yes, I expect what you're saying is correct.

While consumers may be confused by Windows 8, as some others have projected, Wu said that even Microsoft's PC-making partners are unsure what to build that will appeal to consumers.

There are several big problems facing the Wintel crowd:

1. Microsoft (still) has no idea what to do. And it shows.

Windows 8 is a shot in the dark and everyone knows it. It's the "new Vista." Consumers and corporate IT are ignoring "8" and sticking with the more familiar Windows 7. But it's still very early in the game. Let's all wait about 2 or 3 years, then see how well Windows 8 did. By then, Microsoft will be hard at work on Windows 9, and it will be fascinating to see what they (think they need to) do to try and recover from Windows 8's unpopularity.

It's possible that they might never fully recover. Windows 7, like XP before it, could be "good enough" for a decade, at the expense of whatever other releases Microsoft can churn out between now and 2022. And, come to think of it, corporate IT might just keep on wiping brand new PCs and installing the same old XP-plus-business-software disk image. Because XP is still "good enough" and because change is expensive. Microsoft won't officially support XP any more, but we all know how bad Microsoft's technical support is.

2. Microsoft's PC-making partners can only compete on price.

They're still trying to push each other over the low-price cliff. Same old story. You ship a commoditized generic product and you run into competitors who can build a similar commoditized generic product more cheaply. And poof. There goes your margin. That's even happening with Ultrabooks, which haven't exactly set sales records.

So. Where to cut corners? Hardware costs are already cut to the bone. Now Windows is now one of the most costly components of a Wintel PC. Microsoft needs to make money on their software (just Windows and Office, really.) So they need to keep Windows and Office license revenues as high as possible. Fine. Except for problem #3...

3. Microsoft is unprepared for the post-PC era.

They're screwed if they do and screwed if they don't. Screwed if Surface takes off, because Windows RT and its apps are far cheaper than legacy Windows and its apps. If Surface were to become as popular as, say, iPad, then Microsoft's revenues would drop along with legacy Windows / Office license revenue. Or, in the vastly more likely scenario, Microsoft is screwed because Surface + Windows RT will tank and they'll have no horse in the post-PC race. The post-PC era (and all of its vast revenue) will belong to iPad and its imitators. Either way, Microsoft is screwed post-PC-wise.

All of which makes some of us wonder why Ballmer is still in the corner office. I think Ballmer will stay at Microsoft until he retires. He won't be fired. Because if the Microsoft board forcibly removes him, they will be admitting that Surface, Windows 8, and Windows Phone were a waste of time, money, and public good will. And that Microsoft fell into irrelevancy during Ballmer's tenure. And that would be a PR catastrophe. Better to keep Ballmer in place, ride out the initial post-PC-era wave, and fall back to their core competency: milking corporate IT for all they're worth.

"My anecdotes can beat up your anecdotes any day of the week."
I don't personally know anyone who gave up their PC or Mac for an iPad, and if you'll recall, Steve Jobs positioned the iPad as an in-between device slotted between the smartphone and laptop in his January 2010 keynote introducing the iPad. However, as the iPad became more useful due to a slew of easy to use and buy apps, I'm sure people have found less of a reason to turn on their PCs when all they need to do is check Facebook, email, or play Angry Birds. If that's why they had a PC to begin with, then yes, I expect what you're saying is correct.

Is that's what most people use "PCs" for? I'm not talking about people on this site or people that will be reading about CES this week. I'm talking about the average user. The person that will call their "PC" a CPU. There is very little normal computing that the average person can't do on their iPad and from what I've seen most of them enjoy it more on their iPad.

This bot has been removed from circulation due to a malfunctioning morality chip.

Is that's what most people use "PCs" for? I'm not talking about people on this site or people that will be reading about CES this week. I'm talking about the average user. The person that will call their "PC" a CPU. There is very little normal computing that the average person can't do on their iPad and from what I've seen most of them enjoy it more on their iPad.

I agree and for the most part the faithful Mac users buy an iPad in addition (to all their other Apple toys) whereas the average PC user buys it as they crave something better at a price they can afford. They create little as it is and find the iPad does much of what they want and in my experience many find they can do more than they could on their PC.

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

Is that's what most people use "PCs" for? I'm not talking about people on this site or people that will be reading about CES this week. I'm talking about the average user. The person that will call their "PC" a CPU. There is very little normal computing that the average person can't do on their iPad and from what I've seen most of them enjoy it more on their iPad.

For home use? Other than very rarely typing up a letter, the need for which happens less and less these days, email, web browsing (which is mostly Facebook, Twitter, Shopping), and maybe some light gaming (assuming that doesn't mean Facebook gaming) is pretty much it. Probably the most adventurous thing that some of them might do is connect their digital camera and try to email a picture to someone or print it. If they have to do something for work, they might open Excel.

So, yeah, all of that except maybe some of the work stuff they could do much easier on an iPad, sitting on the couch, instead of the cramped "computer desk" most of them probably have. Mac users are probably a little more adventurous, but much of the above could also apply to "most people" who use Macs.

Seems that everyone has different stories. My own home user observations lately have been that...

Some families go all Apple, because well, it's easier to buy and support, with fewer choices. They might have an e-Reader, too.

The more techie type families (perhaps with one member to guide them) seem to own devices from different makers. They might have Apple and/or Android phones, iPad _and_ Nook tablets, along with Windows and/or Mac laptops.

One of my 35-ish daughters recently switched from years of using a MacBook that was getting slow, to a new Windows 8 laptop with touchscreen. I'm a bit surprised at how easily she switched, and how much she liked using it. It's gotten me more curious to try it myself.

"This number doesn't appear to count any non-Google Android tablets like the Kindle Fire, B&N Nook, or any of the other Android tablets that don't come with Google Apps (and thus are not activated through Google).

...

"If these figures hold constant then in a year there will be 25.6M new Android tablets and 68.9M new iOS tablets. That’s in addition to ~10M or more Kindle Fires and Nooks, and is a significant jump over previous estimates (some of which had iPad outselling Android tablets by as much as 30:1)."

That's a lot of iOS tablets. I'd love to see a breakdown by size for both them and the Android ones.

Tablet games are going to have to get a lot more interesting before I drop my PC, not to mention productivity and graphic design software.

For the vast majority who mainly browse the web, send email, and play puzzle games and solitaire, tablets are probably fine...provided they can live with the relatively tiny screen. I don't even use a laptop because I can't stand trading down from my 24" screen.

Edit: Oh, and the ergonomic issues. After a year I still haven't figured out a way to use my iPad 2 for an extended period that doesn't make my neck ache. Suggestions?

Okay, admittedly I have neck issues, which makes me atypical, but I really need to have my neck level. This is possible with a separate monitor, because I can adjust its position easily. The only way a tablet could work would be to hold it at eye level, which is not exactly relaxing. A stand might work, but then I'd have to hold up my arm(s) constantly, which gets tiring.

I simply can't use a tablet or laptop as a lap device, seated or reclining, without bringing on considerable neck pain.

I'm looking forward to the ipad 5's release date. I think its a great idea that Apple is considering making the next ipad thinner and lighter. I think making it lighter is definitely something I'm looking forward too. Also I like everything about the current ipad except the weight so I'm glad is looking into making the next version a lighter form factor.